Corporate Advertising on NBA Team Uniforms

A Professional Capstone Project

Beginning in the 2017-18 season, the National Basketball Association will feature corporate advertising logos on team uniforms for the first time.

The NBA Board of Governors approved the decision on April 15, 2016 and ESPN’s Darren Rovell first reported the plans and basic parameters of the jersey advertising program.

“Teams can now start pitching companies on buying a 2.5-inch-by-2.5-inch space as the NBA becomes the first of the four major U.S. sports leagues to put ads on regular game-day jerseys,” Rovell wrote.

He added, “The money will be counted as basketball-related income and, therefore, split with the players.”

In the April 25 issue of the Sports Business Journal, Terry Lefton and John Lombardo wrote, “The jersey patch will appear on the front left shoulder of teams’ jerseys,” while the right shoulder will feature a Nike swoosh logo.

The beginning of the advertising program coincides with the contract that has Nike replacing Adidas as the manufacturer of the NBA’s uniforms beginning in the 2017-18 season. The Adidas logo does not currently appear on player uniforms.

Rovell also reported that the Charlotte Hornets jerseys “will likely have the logo of the Nike-owned subsidiary Brand Jordan because the team is owned by Michael Jordan,” instead of the Nike swoosh logo.

The NBA is the first of the four largest American professional sports leagues to sell advertising space on jerseys.

The NFL, MLB and NHL “have been very content to sort of sit on the sidelines and watch the NBA be first on this and see how it plays out, how fans respond, how it looks,” ESPN writer and uniform expert Paul Lukas told me in July.

“Virtually every other professional sports league outside North America, of any sport, does have jersey advertising,” he added.

“The players are constantly being shown on television,” he said. “Obviously, that involves their uniform, so it’s an incredible way for an advertiser to be shown and, for the team, it’s an incredible way to make money.”

The sponsorship experiment is scheduled to last for three seasons and will be assessed at the end of the trial period in order to determine whether jersey ads will be permanently instituted.

Not everyone is happy about it, though. Many fans feel that corporate ads on uniforms taint the storied legacy of their favorite NBA franchises and players.

A major point of contention exists that uniforms are one of the only aspects of major American professional sports that have not yet been fully domineered by corporate ads.

As a result, fans may feel that uniforms represent a connection between various franchises’ and their respective cultures, localities, identities and brands.

“It seems like it’s always been kind of the sacred cow,” Ogus said about professional American sports uniforms.

“Sports, in general – they just look for any and every way to make money. The jersey clearly is a good way to do that, but yet they never took advantage of it.”

“I don’t think the uniform is sacred,” said Lukas. Nevertheless, it “already stands for a brand; the brand of the team. Honestly, I don’t understand the impulse, aside from the monetary impulse, to clutter up that brand and that message.”

The uniform represents sports loyalty for fans, which Lukas claimed is “an unusually powerful bond” and an incredibly unique form of brand loyalty.

“We like how something tastes or how it feels, or whatever it is,” he said. “But in the case of sports, the product and the quality of the product is changing all the time because players change all the time.

“This is all what Jerry Seinfeld famously referred to as ‘rooting for laundry,’ that we stick with rooting for or against the same team and the same uniforms no matter who is wearing that uniform.”

Such fierce loyalty and sentimentality for an article of clothing demonstrates the deep connection between fans and sports teams.

“There’s really nothing else like it, at least that I’m aware of, on the consumer landscape,” said Lukas.

“My own feeling is that putting advertising, which has already encroached into every nook and cranny in the sports experience, and for that matter most of our lives, it sullies that bond.”

Ultimately, money is the motivator.

NBA commissioner Adam Silver initially said jersey sponsorship could result in a cash influx of about $100 million a year. It could end up being the third most valuable piece of inventory behind only the rights to media and arena-naming, sources report.

Silver’s next estimation quickly ballooned up to $150 million per year after the Philadelphia 76ers became the first of the 30 NBA teams to sell a jersey advertisement patch by partnering with StubHub on a $5 million per year sponsorship deal.

The immediate 50 percent increase in estimated revenue speaks volumes about the “enormous uncertainty,” which Silver admitted to surround the program.

Lefton and Lombardo wrote, “While the NBA has attached a $100 million annual revenue estimate to the recently approved jersey sponsorships, league officials said the specific value of the patch of uniform ad space is unclear,” because jersey advertising has never been utilized within the four most popular professional American sports leagues.

“It’s been interesting how the core four American sports never really used it,” said Ogus. “It’s really just an amazing place to advertise for all parties and money usually wins the day.”

While the financial benefits are clear, “Even the indirect effect of just the exposure is often worth it and can affect spending habits,” said Ogus.

Significant television exposure can be invaluable, especially for “a younger company that has the budget to do an ad-buy like this,” which may have unique incentives for advertising on local teams’ uniforms, explained Ogus.

Ogus used StubHub as an example, since the ticketing services company will benefit from advertising on the 76ers uniform.

Basketball fans or anybody watching a 76ers game who decides they want to purchase tickets will most likely (continue to) use StubHub for future NBA ticket purchases.

Jersey advertisements also enable sponsorships from corporations that typically would not advertise during NBA broadcasts. Foreign companies especially have a newfound incentive to advertise on NBA jerseys.

“We’re looking at it as something that will allow us to target companies which otherwise wouldn’t buy us,” Brett Yormark, chief executive officer of Brooklyn Sports & Entertainment, told Sports Business Daily in April 2016.

“‘The uniform patch gives us a position that is local, national and global — all in one,’” said Yormark.

According to Ogus, “While $5 million is a lot of money obviously for all of us, it’s a reasonable ad-buy for a company that is getting that type of exposure and some companies will be willing to overpay perhaps to get this exposure.”

He also said high levels of interest and consumer awareness are likely because of the ingenuity of jersey advertisements in major American sports leagues.

The untapped potential of this new financial development has most NBA team owners and presidents excited. Lefton and Lombardo wrote that Rick Welts, president and COO of the Golden State Warriors, said “We all see tremendous value.”

Leslie Alexander, owner of the Houston Rockets, is one of the exceptions. The Rockets were one of two NBA franchises to vote against the program.

“We didn’t think that was fair,” Alexander told Rovell in reference to the redistribution of half of each team’s jersey advertisement revenue. Alexander said, “We have revenue sharing already and we think that is fair.”

But for the Warriors, Welts’ excitement about the program was confirmed in July 2016 when Rovell reported that the Warriors intend to sell their jersey advertising patch space for as much as $20 million per year, potentially quadrupling the $5 million per year deal between StubHub and the 76ers that had initially caused Silver’s revenue estimate to grow by 50 percent.

Teams with high popularity and larger television markets will undoubtedly have the opportunity to sell their small patch of jersey advertising space for significantly more revenue than small market teams and the Warriors’ bulky request will likely set the precedent for other highly marketable teams that enjoy extensive national exposure.

“The Warriors obviously now have Curry and Kevin Durant and they’re going to be on national TV a ton,” said Ogus.

“They’ll likely make another long playoff run next year, so that’s more ad exposure for their uniforms… the Warriors will initially be the highest bid,” he said.

But many question whether this extra revenue is truly worth the tradeoff of potentially damaging the untainted connection of an advertisement-less jersey. There is a passion within many American sports fans to detest corporations for heavily controlling the televised presentation of their favorite teams, sports and players.

Lukas said, “Virtually every facet of the sports experience is now advertised… the uniform has become the last ad-free haven, a place where fan and team can bond without the external noise of competing brands.”

According to a May 9, 2016 Boston Globe article by Christopher Gasper, “Every segment of a sports broadcast is sponsored… constantly reminding viewers and consumers where to spend their money.”

Gasper wrote that “Putting ads on the jerseys is going too far,” and it will not be long before the small shoulder patch advertisement opens the door for much larger, “more conspicuous and shameless” jersey advertisements.

Lukas argues that there is a societal toll that comes with advertisements being crammed onto uniforms and “into every nook and cranny” of our lives.

“Obviously there’s the monetary incentive, but aside from that I think there’s a price in terms of (the NBA’s) messaging,” said Lukas.

“I think it’s wrong. I think it’s bad for our culture.”

Lukas also said that for many fans, the patch program reinforces the notion that corporations truly dominate everything about the professional sports experience.

“I think it’s going to change what people see when they watch a game and it’s going to change the way they think of the uniform and what it stands for,” he said.

“They’ll still watch, but it’s not going to be with quite the same level of enthusiasm or same sense of unvarnished joy,” because the jersey ads will confirm the cynicisms of many fans. Lukas believes that the NBA has nonchalantly risked alienating these fans.

“There’s a calculation here,” Lukas said. “Not ‘how can we make the fan experience better,’ but ‘how can we just leverage it financially without alienating so many people?’ And I think that is an unfortunate way to run one’s business.”

Advertisements are not inherently evil. As Lukas wrote on April 15, 2016 for an ESPN column, “Advertising can be entertaining, it can be enlightening, and occasionally it can even be beautiful.”

However, the side effect from Lukas’s assessment prove that jersey ads do infringe upon the fan experience, albeit subtly.

Jersey ads have become a staple in international professional soccer leagues such as the European Premiere League.

Although international soccer is a different sport that offers a unique television experience and therefore unique opportunities for revenue.

More importantly, “Soccer doesn’t have in-game clock stoppages for commercials like the other major team sports,” wrote Gasper.

“Jersey ads were a way to keep the games that way. It’s because of soccer’s popularity that European sports are amenable to ads on jerseys in other team sports, like basketball.”

The Boston Globe article also said, “It’s (already) reality in the WNBA, where some team names are merely the fine print of an ad,” referring to the uniforms for the WNBA’s Seattle Storm.

The Storm’s uniforms feature corporate advertising logos for Swedish Medical Center and Verizon Wireless prominently on the front and center of the jerseys, while the team city and name are compressed into a tiny off-center logo.

Gasper wrote, “The WNBA has allowed jersey advertising since 2009. It was the basketball beta test for the NBA.”

Unlike the NBA, the WNBA needs advertising revenue from jersey sponsorships. They do not generate huge amounts of revenue from massive television deals and other merchandising opportunities.

With this mindset, Lukas said that “sponsorship” is the wrong word to describe the pilot patch program being instituted in the NBA.

“I reject the notion that any of this is sponsorship, which involves providing essential support for something that would otherwise collapse,” said Lukas.

“This is not sponsorship. This is simply advertising,” he said.

Nevertheless, according to Ogus, the four major American sports leagues could not hold out forever on jersey advertising.

Gasper also wrote, “Players as product placement is an affront to basketball fans everywhere.”

“It confirms their cynicism and their jadedness,” said Lukas. “It doesn’t mean they’re going to stop watching, but it means they’re going to watch with a more jaundiced eye and I think that’s sad.”

The NBA is prepared for backlash from fans. The institution of the advertising program is a calculated risk because Silver and the NBA know that the majority of NBA fans will continue watching once jersey ads have been instituted.

The league also will allow teams to sell jerseys both with and without the new corporate advertising patches to their fans in hopes of relieving some of the aggravation from those with strong feelings against the program.

Still, Lukas believes that there will be noticeable negative effects.

Most prominently, he referred to the “jaundiced eye” that fans will watch with and the level of uninhibited joy that fans will lack after no longer rooting for teams that proudly promote their own brands as entities rather than accentuating the brands of unrelated corporations that pay to plaster their logos in the advertising space on the uniforms of professional athletes.

“I don’t think there’s much (benefit) for the fans to be perfectly honest,” said Ogus. “But for the league, certainly they make money, they get to cultivate a new advertiser, they get to see what these jersey patches are worth.”

“Certainly a lot of benefit from the league and team standpoint,” he added. “I think there’s limited fan benefit unless StubHub makes it really easy for fans to get tickets or another advertiser really provides the benefit for the league as of being more involved.”

Further contention for the jersey advertisement program lies within existing player endorsement deals. An imminent conflict of interest looms within the scenario during which a team endorses a company that rivals another company that is already being individually endorsed by one or more of that teams’ players.

These partnerships could legitimately impact the NBA landscape, contributing to decisions regarding where certain players are willing to sign contracts or whether certain players can feasibly be traded to certain teams.

The integration of the program will not be seamless and the three-year program will be evaluated at the end to determine whether or not jersey advertisements will become a mainstay in the NBA.

It will undoubtedly generate millions of dollars for the NBA, its teams and its players. But that monetary gain comes at a cost as fans observe the league’s greediness.

It is unlikely that backlash from some upset fans could derail the advertisement patch program that will open the door for jersey advertisements within all of America’s most popular professional sports leagues. Although nothing is ever for certain.

“In the end, there might not be enough money or it might not be worth the cynicism,” said Lukas.

“It might be a combination of negative fan response, maybe the revenue – like when they set a price for selling an ad on the jersey maybe the companies balked at that price and negotiated lower prices so there wasn’t as much revenue as they expected,” he said.

“Maybe there would be some sort of culture clash between the player endorsements and the team. There are certain pitfalls here they’re going to have to work to avoid and maybe they’ll decide that that’s not worth the hassle.”

Ogus also said that while the program is likely to be considered successful for sheer monetary reasons, “It could fail.”

“Let’s say fans turned out to really like a clean uniform and (the 76ers) make $5 million off of the sponsorship but they lose a lot more in less jersey sales… I don’t think a 2-inch-by-2-inch ad is going to drastically change whether fans want the jersey, or not. But, if you’re looking for ways that it could potentially fail, I think that’s one for sure.”

Despite feeling strongly against the patch program, Lukas said that jersey ads will become a staple in American professional sports leagues.

“This is the type of initiative that is like a ratchet that only goes in one direction,” Lukas said.

“It’s hard to imagine them going back, in part because that would be an admission of having made a mistake. Big corporations of any kind don’t like to admit that they’ve made mistakes.”

“It always kind of takes that first person to do it. The NBA has, and everyone likes money… I would have to think that all the leagues right now are discussing it and you’d have to think in the next couple of years that all four major leagues are going to be doing this in the near future.”

“It’s basically asking them, ‘do you want money or do you not want money?’ and I would venture to guess that most people will want the money,” Ogus said.

Lukas feels that the league has much more than revenue to consider. He said, “The uniform is a pretty direct message: This is our team.”